Luxottica

Luxottica Group S.p.A.
Società per azioni
Traded as BIT: LUX, NYSE: LUX
Industry Eyewear manufacturing, luxury, eyewear manufacturing and wholesale distribution, eyewear retailing
Founded 1961 (1961) in Agordo, Italy
Headquarters Milan, Italy
Area served
 Worldwide
Key people
 Leonardo Del Vecchio
(Founder and Executive Chairman)
Massimo Vian
(CEO, Product and Operations)
Products Sunglasses, spectacle frames, prescription frames
Services Opticians, optical retail, sun retail
Revenue € 9.086 billion (2016)[1]
€ 1.345 billion (2016)[1]
Total assets € 10.300 billion (2016)[1]
Total equity € 5.784 billion (2016)[1]
Number of employees
 82,282 (2016)[1]
Divisions Ray-Ban, Persol, Oakley, LensCrafters, OPSM, Sunglass Hut, Apex by Sunglasshut, Eyemed, Pearle Vision, Sears Optical, Glasses.com, Onesight
Website luxottica.com

Luxottica Group S.p.A. is an Italian eyewear company. Based in Milan, Italy, it is the world's largest eyewear company.[2][3]

As a vertically integrated company, Luxottica designs, manufactures, distributes and retails its eyewear brands, including LensCrafters, Sunglass Hut, Apex by Sunglass Hut, Pearle Vision, Sears Optical, Target Optical, Eyemed vision care plan, and Glasses.com. Its best known brands are Ray-Ban, Persol, and Oakley.

Luxottica also makes sunglasses and prescription frames for designer brands such as Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Miu Miu, DKNY, and Tory Burch.[4][5][6]

In January 2017 it announced a merger with Essilor to be completed by mid-2017, resulting in combined market capitalization of approximately €46 billion.[7]

History

Leonardo Del Vecchio started the company in 1961,[8] in Agordo north of Belluno, Italy; today the company is headquartered in Milan.

Del Vecchio began his career as the apprentice to a tool and die maker in Milan, but decided to turn his metalworking skills to making spectacle parts. So in 1961, he moved to Agordo in the province of Belluno, which is home to most of the Italian eyewear industry.[9] The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners.[9] In 1967, he started selling complete eyeglass frames under the Luxottica brand, which proved successful enough that by 1971 he ended the contract manufacturing business.[10]

Convinced of the need for vertical integration, in 1974, he acquired Scarrone, a distribution company.[9] In 1981 the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion.[9] The first of many licensing deals with a designer was struck with Armani, in 1988.[11]

The company listed in New York in 1990,[12] and in Milan in December 2000,[13] joining the MIB-30 (now FTSE MIB) index in September 2003.[14] The listing raised money for the company and allowed it to use its shares to acquire other brands, starting with Italian brand Vogue Eyewear in 1990, Persol and US Shoe Corporation (LensCrafters) in 1995, Ray-Ban in 1999 and Sunglass Hut, Inc. in 2001.[9] Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004.[15] Luxottica acquired Oakley in November 2007 for US$2.1 billion. Oakley had tried to dispute their prices because of Luxottica's large marketshare, and Luxoticca responded by dropping Oakley from their stores, causing their stock price to drop, followed by Luxottica's hostile take over of the company.[16] In August 2011, Luxottica acquired Erroca for €20 million.[17]

In March 2014, it was announced that Luxottica would partner with Google on the development of Google Glass and its integration into Luxottica's eyewear.[18]

On the 1st September 2014, a new organizational structure was announced, composed of two co-CEOs, one focusing on market development and the other overseeing corporate functions. After the exit of former CEO Andrea Guerra, Enrico Cavatorta was appointed CEO of Corporate Function and Interim CEO of Market (until new and permanent appointment to this role).[19][20][21]

Enrico Cavatorta left the company 40 days after being appointed CEO. In 2016, it was reported that Luxottica had lost its third chief executive in a year and a half as Adil Mehboob-Khan stepped down a year after he replaced Cavatorta. [22]

In January 2017, the company agreed on a €46 billion merger with Essilor.[23] The deal will also help to offer a succession plan for Leonardo Del Vecchio, the company's founder.[24]

Brands

Persol sunglasses
Ray-Ban sunglasses

Luxottica's two main product offerings are sunglasses and prescription frames. The company operates in two sectors: manufacturing & wholesale distribution, and retail distribution.[25]

The house brands include the following:[26][27]

The company also makes eyewear under license for the following designer labels:[26][27]

These brands are sold in the company's own shops, as well as to independent distributors such as department stores, duty-free shops, and opticians.

Retail

Luxottica Retail has approximately 8,000 retail locations[1] in the United States, Latin America, Canada, China, Australia, New Zealand, South Africa, the United Kingdom, and United Arab Emirates.[15] The headquarters of the retail division is in Mason, Ohio, United States (North America).[15] Their retail banners include the following:[29]

Charity

Luxottica had three charitable programs named Give the Gift Of Sight, Pearle Vision OneSight Foundation in North America, and the I-Care Community in Australia. These three programs were founded in 1988. Luxottica came to a decision to unite all three charitable programs into one global foundation and call it OneSight.

Medical managed care

Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States.[31] As of 2014, it is the second largest vision benefits company in the United States.[32][33][34]

Criticism

The company has been criticised for the high price of its brand-name glasses, such as Ray-Ban, Oakley, and several others. A 2012 60 Minutes segment focused on whether the company's extensive holdings in the industry were used to keep prices high. Luxottica owns not only a large portfolio of brands such as Ray-Ban and Oakley but also retailers such as Sunglass Hut and Oliver Peoples, the optical departments at Target and Sears, as well as key eye insurance groups including the second largest glasses insurance firm in the US. It has been accused of operating a complete monopoly on the optical industry and overcharging for its products — for example, increasing the prices of Rayban sunglasses after buying the company as well as temporarily dropping Oakley from its frame design list, then when the company stock crashed, purchasing the company. In addition, it has been argued that, by owning the vision insurance company EyeMed, it also controls part of the buyers' market as well.[33]

Financial performance

(Amounts in thousands of Euros)

Year Net sales (k€) Operating income (k€) Net income (k€) – Net Income attributable to Luxottica Group Stockholders
2016 [1] 9,085,707 1,345,267 850,524
2015 [35] 8,836,578 1,376,445 804,119
2014 [36] 7,652,317 1,157,613 642,596
2013 7,313,000 1,056,000 545,000
2012 7,086,142 982,049 541,700
2011 6,222,483 807,140 452,343
2010 5,798,035 712,158 402,187
2009 5,094,318 571,085 299,122
2008 5,201,611 731,639 390,167
2007 4,966,054 833,264 489,850

[37]

Transfer pricing issues

In December 2013, Luxottica Group paid €33 million to the Italian Agency of Revenue to settle transfer pricing issues that arose in 2007.[38]

Major shareholders

The list of Luxottica shareholders with more than 2% of holdings, represented by voting shares at 23 December 2014.[39]

In September 2012, Delfin S.a.r.l. reduced its share of Luxottica from 66% to 62.1%,[40] but later increased its share to 66% again.

See also

Safilo

References

  1. 1 2 3 4 5 6 7 "Annual Report 2016" (PDF). Luxottica. Retrieved 28 April 2017.
  2. ↑ "Luxottica to Buy a U.S. Sunglasses Maker". The New York Times/Reuters. 2007-06-21.
  3. ↑ Editorial, Reuters. "${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com". Reuters. Retrieved 2017-05-25.
  4. ↑ Brett Arends, "Are Designer Sunglasses Worth the Price?", Wall Street Journal, July 22, 2010.
  5. ↑ Eyewear brands, May 1, 2015.
  6. ↑ Touryalai, Halah. "Ray-Ban, Oakley, Chanel Or Prada Sunglasses? They're All Made By This Obscure $9B Company". Forbes. Retrieved 2017-05-25.
  7. ↑ Chad Bray and Elizabeth Paton, Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor The New York Times 2017/01/16
  8. ↑ "World's Billionaires Leonardo Del Vecchio". Forbes March, 2011.
  9. 1 2 3 4 5 "Luxottica Past and Present". Luxottica Group S.p.A. Retrieved 2009-11-02.
  10. ↑ "Santander research" (PDF). Borsa Italiana 2003.
  11. ↑ "The Armani Group and the Luxottica Group announce expiration of licence agreement". in Pambianco News November 21, 2002.
  12. ↑ "Luxottica Group S.p.A.". NYSE, New York Stock Exchange.
  13. ↑ "Luxottica". Borsa Italiana.
  14. ↑ "Luxottica Group Added to MIB 30 Index" (PDF). Syndication Teleborsa 22, 2003.
  15. 1 2 3 "Luxottica Facts and Figures". Luxottica Group S.p.A. Retrieved 2011-08-10.
  16. ↑ "Luxottica Group and Oakley complete merger" (PDF). Syndication Teleborsa, 2007.
  17. ↑ "Luxottica buys Erroca sunglasses chain for €20m". in Globes September 13, 2011.
  18. ↑ Google to De-Dorkify Glass in Partnership With Ray-Ban Maker Luxottica, Businessweek, March 25, 2014
  19. ↑ "Luxottica sets new co-CEO model, Guerra to leave, Cavatorta named CEO Corporate, interim CEO Markets". Vision Monday.
  20. ↑ "A management shake-up at Luxottica, Ray-Ban maker". The New York Times.
  21. ↑ "Luxottica announces the implementation of a new governance structure based on a co-CEO model". Luxottica.
  22. ↑ "Loss of another Luxottica chief is a concern for Italy Inc". The Financial Times.
  23. ↑ Ray-Ban Maker Luxottica to Merge With Lens Company Essilor, Creating $49 Billion Eyewear Giant, Wall Street Journal, January 16, 2017, retrieved January 17, 2017
  24. ↑ "Ray-Ban maker Luxottica agrees €46bn merger with Essilor". BBC News. 16 January 2017.
  25. ↑ "Luxottica S.p.A". Bloomberg Businessweek. Retrieved 2011-08-10.
  26. 1 2 "Luxottica Group S.p.A". in Reuters. Retrieved 2011-08-10.
  27. 1 2 "Brands". Luxottica Group S.p.A. Retrieved 2016-04-29.
  28. ↑ "WWD: Valentino and Luxottica Sign Licensing Agreement". Retrieved 28 April 2017.
  29. ↑ "Annual Review 2014". Retrieved June 12, 2015.
  30. ↑ "Reuters: Luxottica buys remaining 63.2 pct of Salmoiraghi & Vigano". Retrieved 28 April 2017.
  31. ↑ "Our Position in the Industry". EyeMed Vision Care. Retrieved 2011-08-10.
  32. ↑ "Activities: Managed Vision Care", Luxottica website
  33. 1 2 "Sticker shock: Why are glasses so expensive?". 60 Minutes. CBS News. October 7, 2012. Retrieved October 19, 2012.
  34. ↑ "Forbes: There's More To Ray-Ban And Oakley Than Meets The Eye". Retrieved March 31, 2015.
  35. ↑ "Annual Report 2015" (PDF). Luxottica. Retrieved 29 April 2016.
  36. ↑ "Annual Report 2014" (PDF). Luxottica. Retrieved June 12, 2015.
  37. ↑ http://www.luxottica.com/en/investors/financial_overview/compared_data/
  38. ↑ Turra, Alessandra (10 December 2013). "Luxottica Group to Settle Up With Italian Revenue Agency". WWD. Retrieved 10 December 2013.
  39. ↑ "Azionisti rilevanti di LUXOTTICA GROUP SPA". Commissione Nazionale per le Società e la Borsa. Retrieved 27 December 2014.
  40. ↑ Mesco, Manuela, "Delfin cuts Luxottica stake to 62.1% from 66%", MarketWatch, Sept. 6, 2012
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